The luxury goods market is not only showing general growth, with sales surpassing $257 billion in 2021, it is also attracting a new customer base, with different demands, expectations and focuses — such as resale.
As Millennials and Gen Z consumers increasingly warm to the luxury goods resale market as a means of fulfilling needs relating to sustainability, affordability and investment, luxury brands are likewise increasingly keen to capitalise on this expanding market. Innovations and new applications of technology, particularly blockchain are helping to facilitate this.
The luxury resale market alone is expected to be worth $77 billion in 2025, with growth rates outpacing the wider luxury market in general. Resale in clothing retail is driving growth and is expected to grow 11 times faster than ordinary clothing retail, with much of this expected to come from the luxury clothing market.
Appealing to a New Demographic
A lot of the reasons for the growth in the luxury goods resale market comes down to the changing demographic of the customer base. For luxury, price concerns and even aspects like timelessness, enduring desirability, durability, and in some cases, scarcity, makes it particularly well-suited for the resale market.
Millennials and Gen Z are now the luxury brands’ customers. But their requirements extend beyond simple possession. These generations are digital natives, they expect intuitive and modern online experiences. But, they also value the authenticity and integrity of brands, and this ties into sustainability and ethical sourcing.
Not to mention their concerns with fast fashion and an increasing demand for vintage or more environmentally-friendly purchases, all of which make the resale market of particular interest to this demographic of customer.
However, the expansion of the luxury goods resale market, and with it a new generation of buyers, has not always been hugely lucrative for luxury brands, as many companies have struggled to take advantage of the opportunities that this growing market offers.
It’s a competitive space with established players not traditionally being the luxury brands themselves. Add onto that the challenges that a booming counterfeit market brings — especially for the resale market — and it is understandable why there has been a bit of a stall in brands capitalising on this growing market.
That is changing, though. Blockchain in luxury goods resale has emerged as a perfect technology to bolster this space and facilitate new innovations and ways of purchasing that appeal to this new generation of buyers. Plus, with new opportunities afforded to them, luxury brands themselves are also benefiting, creating their own resale markets and processes thanks to innovative applications of blockchain technology.
With its ability to authenticate second-hand goods, create digital product passports, enable NFTs and prove both provenance and sustainability, blockchain technology in luxury is having a transformative effect.
Capitalising on the Luxury Resale Market via Blockchain Technology
Providing a transparent ledger that is secure, unalterable, traceable, and distributed; blockchain in the luxury goods second hand market is helping to verify and prove the origin and authenticity of goods through the application of digital product passports, NFTs and more.
With age-old challenges around authentication, tracking, ownership and proof of provenance being solved via applications such as digital product passports, luxury brands finally have the confidence to venture into spaces that were previously deemed as too risky, time intensive or unworthy of investment.
For example, the once time-intensive challenge of authenticating second hand goods can now be easily overcome with the application of a digital passport / digital twin, firmly linked to an individual product via NFT technology. Real-time digital certificates can be issued and validated with ease, enabling customers and brands alike to be assured of a product’s authenticity.
This removes the need for brands to spend time and resource on painstakingly authenticating individual products (or outsourcing this task) as they move through the resale market, and opens up opportunities for brands to participate in the resale market in a much more direct way.
Luxury watch manufacturer Breitling has, since 2020, gone forward with attaching a digital passport to each of its watches. One of the benefits of this digital passport is that it will ensure the authenticity of the watches if they ever come to be traded in or sold on one of the secondary market or pre-owned platforms.
Opening up New Opportunities for Resale Revenue Streams
Outside of digital product passports, blockchain technology is enabling luxury brands to unlock new revenue streams in emerging resale markets via the use of a new type of ‘luxury good’ the NFT.
NFTs are blockchain tokens that are non fungible, meaning they are not interchangeable. This makes them unique, coveted and able to be owned exclusively, thus aligning with many of the properties that customers seek from purchasing luxury goods.
Many luxury organisations have already begun making their mark on the digital realm by offering their own unique NFTs for purchase. Adidas, for instance, has teamed up with fashionista Karlie Kloss to bring digital Adidas sneakers, based on and twined with physical shoes, to Decentraland users.
Those brands that take the initiative to capitalise on the demand for NFTs are able to use these digital assets to unlock extremely profitable new revenue streams, but they can even do so on the resale market — with opportunities to get a cut of the resale of the NFTs that they produce.
For example, brands can build in pre-set conditions that ensure that they receive a cut of NFT sales, not just at the original point of sale, but also within all future resales on secondary marketplaces such as OpenSea. With this fee structure, brands unlock profitable and arguably indefinite revenue streams in the NFT resale market.
How to Utilise Digital product Passports to Benefit From Luxury Goods Resale
Blockchain technology is the basis for both the digital passport technology and NFTs that are facilitating luxury brands’ entry into the resale market, but not all blockchains are the same. At Protokol, we utilise flexible and interoperable blockchain platforms and NFT technology, to create secure, digital product passports or NFT solutions for luxury goods brands.
Protokol is an enterprise blockchain service provider that is helping luxury goods brands take advantage of the vast array of opportunities available in the growing luxury resale market.
Not only do we create highly customisable digital product passport solutions that work with your existing IT infrastructure, but we can also consult on the use of this technology to help your organisation understand how it will bring greater trust and more transparency when it comes to the authenticity of products, which, in turn, will increase consumer confidence in your brand and unlock new opportunities for revenue generation within the luxury resale market.
With an efficient and unalterable way of ensuring a product’s authenticity, digital passports and the underlying blockchain technology is enabling brands just like yours to diversify, drive growth and improve profitability.
Take the first step today and let Protokol help your brand uncover the benefits of blockchain technology and its applications within luxury resale. Book a consultation with our blockchain experts or learn more about the Protokol Digital Product Passport here.